'Open for business': Los Angeles pioneers local tax reform

In a challenging economic environment

This article discusses the past and present reform efforts related to the City of Los Angeles’ Business Tax, using its history as a framework to examine future reform efforts that seek to create a more business-friendly environment.

An updated analysis of Los Angeles business tax reform

In recent months, multiple cries to “Axe the tax!” have been heard in the Los Angeles business community.1 The City of Los Angeles, the second largest city in the United States,2 imposes the Los Angeles Business Tax (“LABT”), a gross-receipts-based tax on persons and business entities doing business within the City. A movement to completely eliminate the tax, and not just reduce or modify it, has received a surprisingly large amount of support—not only from the taxpayers, but also from politicians and members of the local government, whose budgets rely on the revenue generated by this tax.

This article seeks to present both the history and the current developments concerning the LABT, including the past and present tax reform efforts of the City Council, the Mayor’s office, the Business Tax Advisory Committee (“BTAC”) I, and BTAC II, as a framework for considering future tax reform efforts.

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